Oracle takes an arrow to the EPS: It's that darned strong dollar... again

Q3 '14 fails to impress Wall St

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Oracle is claiming a $9.3bn haul of revenues, up 4 per cent year-on-year, in its third quarter of fiscal 2014 – but that fell short of Wall Street analyst earnings expectations.

The company said that on the quarter it saw GAAP earnings per share of $.56, up 8 per cent and just short of the projected 10 per cent increase. Overall, the company saw gains in both its hardware and software businesses, while Oracle Services took a 4 per cent drop compared to the previous quarter.

Though the company was able to up its revenues on the quarter, gains were below Wall Street estimates, which had the company posting a 10 per cent increase in GAAP earnings-per-share. Oracle argued that it would have hit the mark had it not been for "the impact of the US dollar strengthening compared to foreign currencies."

Analysts, however, did not buy the company's explanation. Shares in Oracle fell by as much as 5 per cent in after-hours trading following the announcement of the figures. At the time of publication, ORCL was trading down 3.4 per cent.

Overall, the company posted a net income of $2.56bn, up 2 per cent on the same period in the previous year. Software revenues accounted for 75 per cent of the company's take, while hardware contributed 14 per cent of revenues and services, 11 per cent.

Revenues for Oracle Services were down 4 per cent over the previous year's quarter, while hardware revenues saw a climb of 7 per cent.

In particular, the company touted the growth in its cloud services divisions. Company president Safra Katz said that Cloud Software subscriptions have grown by 25 per cent on the quarter, while the Engineered Systems revenue was up 30 per cent.

At just $725m, however, hardware revenues fell short of analyst expectations, which had forecast the unit would draw as much as $878m. The company has struggled with hardware since it acquired Sun's server business. In recent quarters, revenues have appeared flat as the company has pushed customers on systems of branded server hardware and Oracle software and middleware platforms.

As one might expect, CEO Larry Ellison put a positive spin on the figures, claiming that the company was doing well compared to overall declines in the hardware space.

Closer to the front lines of IT, Oracle has released to general availability a new version of the Java Development Kit. The JDK 8 release offers additional support for lambda code in parallel programming and multicore environments, as well as a number of new API integrations and security updates. ®